THE SOVIET REFORMS

AND THE THRUST

FROM THE RIGHT

Article in Novy Mir by N. Shmelyov makes sweeping attack on Soviet economy. Gorbachev is forced to respond. Comparison of today's "left, right and center" with those in 1920s. Shmelyov on the desirability of unemployment and the vices of the workers. Sees economic laws of capitalism as "objective." Wants to go back to NEP. How Lenin explained NEP. Shmelyov's fantasy vs. class differentiation of NEP period. Collectivization of agriculture--form and content. The neobourgeoisie attack the reforms for not going far enough toward capitalism.

Whether what may be called the Shmelyov thesis, as it appeared in Novy Mir, has deep and wide adherence remains to be seen, especially after the extraordinary Party Conference scheduled for June 1988.

The article, far from concealing the basic views of the author, is on the contrary quite open and blunt, if not outright brazen. Because of the widespread interest it generated, General Secretary Mikhail Gorbachev himself was forced to respond to it. Thus, on June 22, 1987, at a meeting he attended in electoral district Number 5, Krasnaya Borough, Moscow, Gorbachev was asked by a reporter from Pravda about "many pointed, controversial materials on restructuring" which were appearing in the Soviet press. Did recent writings on restructuring give "questionable prescriptions for surmounting our difficulties? For example, economist Shmelyov's article in Novy Mir."

Gorbachev replied, "I would divide that article into two parts. The first is an analysis of the state of affairs in the economy, and it presents a picture that is close to what actually exists and we will talk about that at the plenary session.

"The second part is what the author proposes," Gorbachev continued. "He apparently proposes, for example, that there be unemployment. That's not for us. We are well aware of our weaknesses and unresolved problems, but neither can we forget the fact that socialism has given every one of us the right to work and to an education, free medical service, and accessible housing. These are genuine values in our society which provide social protection for the individual today and for the future." ¹

Then Gorbachev added, "The measure of consumption is another matter. Socialism is not a system of dependence. Needs grow but they must be managed. But the main thing in that work is the implementation of the basic principle of socialism, to each according to his labor."

Notwithstanding Gorbachev's assurances, the Shmelyov thesis continues to be of more than topical significance. It is, in fact, the platform of the neobourgeois elements in the government. It can be contrasted to the platform of the so-called conservatives published on March 13, 1988, in Sovetskaya Rossiya in the form of a letter by Nina Andreyeva, an instructor at a Leningrad high school.

Superficially all this appears to be a reappearance of the older, classical divisions of right, left and center in the Party polemics of the early 1920s. These designations, however, have only the faintest resemblance to those polemics, which were represented by Bukharin on the right, the Trotskyist opposition on the left, and Stalin and his supporters in the center. Today the entire historical context has changed. But it is helpful to consider them merely from the point of view of analogy.

Shmelyov's thesis scarcely compares with Bukharin's views on a market economy or on dealing with the peasantry in the development of socialism. All the participants at that time had been thoroughly grounded in Marxist doctrines and trained in the school of Bolshevism. The Shmelyov thesis is a lamentable bourgeois economic critique of the problems of the Soviet economy. While Gorbachev took great care to distance himself from Shmelyov's conclusions and prescriptions, he nevertheless approved his criticisms, which are inescapably linked to the conclusions. It is quite impossible to accept Shmelyov's criticisms, let alone his conclusions.

Shmelyov's thesis is calculated to test out the affirmations made again and again by the Party leadership, especially Gorbachev,² that no unemployment will result from the restructuring and that none is contemplated. Nevertheless, it is necessary to see precisely what Shmelyov's criticisms are as well as his prescriptions. The grouping he represents seems formidable, from the point of view of both economics and politics.

First, he says there is unemployment in the Soviet Union today:

. . . the natural unemployment that results from people looking for or changing jobs is hardly less than 2 percent of the work force at any given time, and that figure is probably more like 3 percent if one adds in the hoboes who are unaccounted for in the official records.³

So it is one thing to discuss the matter while pretending that there is no unemployment whatsoever in our country, and it is something quite different to do so while calmly taking account of the fact that there is some unemployment in our country and there would have to be.

We must also not close our eyes to the economic harm that results from our parasitical certainty of guaranteed employment.

I think it's clear to everyone that we owe much of today's disorder, drunkenness and shoddy workmanship to overemployment.

We should have a businesslike and unflinching discussion of what the benefits might be from a relatively small reserve work force (one that the state would not entirely abandon to the whims of fate, of course).

A real danger of losing one's job and going on temporary unemployment pay, or of having to work where one is sent, is rather good medicine against sloth, drunkenness and irresponsibility. Many experts feel that it would be cheaper to pay adequate unemployment compensation for a few months to such temporarily unemployed than it is to keep a lot of fearless loafers [emphasis added--S.M.] in the work force who could scuttle (and are scuttling) any and all economic accountability and any and all efforts to improve the quality and efficiency of social labor.

The well-known Soviet economist S. Shatalin stresses that "socialism has yet to create a mechanism that ensures not just full employment . . . but full employment that is socially and economically effective and rational. Socialist principles are not charity principles that automatically guarantee everyone a job, irrespective of his aptitude for it."

Apathy, indifference, theft and lack of respect for honest work are rampant, as is aggressive envy toward those who enjoy high earnings--even in cases where the earnings are honestly come by. There are signs of an almost physical degradation of the Soviet people as a result of drunkenness and sloth. And finally, there is distrust of announced goals and intentions, and skepticism about the possibility of organizing economic and social life in a more sensible fashion.

Isn't it a fact that workers here in the U.S. hear this same type of attack again and again in the capitalist press? Who has not heard the accusations of laziness, low productivity, disinterest in production and the work ethic? What are the causes of it?

According to the Shmelyov thesis:

The reason for our difficulties is not merely the heavy burden of military expenditures and the very costly scope of the country's global responsibilities.

It is the persistent and prolonged attempts to circumvent the objective laws of economic life and to suppress established, age-old work incentives that has ultimately led to results opposite from those being sought.⁴

Marx discovered capitalist accumulation. This law was not circumvented in the USSR, it was abolished by the proletarian revolution. The law of the extraction of surplus value by the capitalists from the exploited working class was not circumvented--it too was abolished.

As long as the capitalist class existed in Russia, as long as they were allowed to own and operate the plants, there existed the law of capitalist accumulation and the law of the extraction of surplus value, that is, of exploiting the workers and reducing them to wage slaves. Those were the fundamental objective laws governing economic life in the entire preceding era that began with the development of capitalism in the USSR, which Lenin analyzed in 1899 in his "The Development of Capitalism in Russia."⁵ There was no circumvention of these laws. There was outright abolition by virtue of the seizure of power by the workers and the overthrow of the landlords and the bourgeoisie.

What is Shmelyov driving at? Certainly if the Soviet economy is up against certain objective laws, those laws must be enumerated and carefully examined to see if they can be modified or abolished, or if the system can be put in accord with them. On this point he is silent, as are all his co-thinkers. However, he does give us sufficient reason to believe that what he has in mind is really a restoration in some form of the laws of capitalist development. For we read:

If we do not admit that the rejection of Lenin's New Economic Policy imposed severe difficulties on the building of socialism in the USSR, we will doom ourselves once again--as in 1953 and 1965--to half-measures, and half-measures, as we know, are often worse than no measures at all. The "administered" economy that replaced the NEP was by its very nature unable to address questions of quality and efficiency and achieved its quantitative results in spite of the laws of economics, and therefore at great cost in material and human resources.⁶

What was this period and how should we characterize it? How did Lenin, who proposed it, characterize it? The New Economic Policy was explained by Lenin in October 1921 in a report to the Second Congress of Political Education Departments.⁷

At the beginning of 1918 we expected a period in which peaceful construction would be possible. When the Brest peace was signed it seemed that danger had subsided for a time and that it would be possible to start peaceful construction. But we were mistaken, because in 1918 a real military danger overtook us . . . and the outbreak of civil war, which dragged on until 1920. Partly owing to the war problems that overwhelmed us and partly owing to the desperate position in which the Republic found itself when the imperialist war ended--owing to these circumstances, and a number of others, we made the mistake of deciding to go over directly to communist production and distribution. We thought that under the surplus-food appropriation system the peasants would provide us with the required quantity of grain, which we could distribute among the factories and thus achieve communist production and distribution. . . .

That, unfortunately, is a fact. I say unfortunately, because brief experience convinced us that that line was wrong, that it ran counter to what we had previously written about the transition from capitalism to socialism, namely, that it would be impossible to bypass the period of socialist accounting and control in approaching even the lower stage of communism. Ever since 1917, when the problem of taking power arose and the Bolsheviks explained it to the whole people, our theoretical literature has been definitely stressing the necessity for a prolonged, complex transition through socialist accounting and control from capitalist society (and the less developed it is the longer the transition will take) to even one of the approaches to communist society.

At that time, when in the heat of the Civil War we had to take the necessary steps in economic organization, it seemed to have been forgotten. In substance, our New Economic Policy signifies that, having sustained severe defeat on this point, we have started a strategical retreat. We said in effect: "Before we are completely routed, let us retreat and reorganize everything, but on a firmer basis. . . ." ⁸

The New Economic Policy means substituting a tax for the requisitioning of food; it means reverting to capitalism to a considerable extent--to what extent we do not know. Concessions to foreign capitalists (true, only very few have been accepted, especially when compared with the number we have offered) and leasing enterprises to private capitalists definitely mean restoring capitalism, and this is part and parcel of the New Economic Policy. . . .⁹

The issue in the present war is--who will win, who will first take advantage of the situation: the capitalist, whom we are allowing to come in by the door, and even by several doors (and by many doors we are not aware of, and which open without us, and in spite of us), or proletarian state power? . . .

On the other hand, if capitalism gains by it, industrial production will grow, and the proletariat will grow too. The capitalists will gain from our policy and will create an industrial proletariat, which in our country, owing to the war and to the desperate poverty and ruin, has become declassed, i.e., dislodged from its class groove, and has ceased to exist as a proletariat. The proletariat is the class which is engaged in the production of material values in large-scale capitalist industry. Since large-scale capitalist industry has been destroyed, since the factories are at a standstill, the proletariat has disappeared. It has sometimes figured in statistics, but it has not been held together economically.

The restoration of capitalism would mean the restoration of a proletarian class engaged in the production of socially useful material values in big factories employing machinery. . . .¹⁰

The period preceding NEP had been characterized by the fact that the proletariat had nearly disappeared as a result of the imperialist war, the civil war and the counterrevolution. Thus, one of the great motivations for NEP was not just commerce and trading, it was to restore and build up a proletariat. How unlike the USSR today, which has an enormous proletariat, one of the most numerous in the world! Large-scale production? The Soviet Union is second only to the U.S.

The whole question is who will take the lead. We must face this issue squarely--who will come out on top? Either the capitalists succeed in organizing first--in which case they will drive out the Communists and that will be the end of it. Or the proletarian state power, with the support of the peasantry, will prove capable of keeping a proper rein on those gentlemen, the capitalists, so as to direct capitalism along state channels and to create a capitalism that will be subordinate to the state and serve the state.¹¹

Our Party must make the masses realize that the enemy in our midst is anarchic capitalism and anarchic commodity exchange. We ourselves must see clearly that the issue in this struggle is: Who will win? Who will gain the upper hand? ¹²

After trials and tribulations and even horrendous mistakes on the part of the new revolutionary government, the capitalists did lose out. The NEP period was finally abolished and socialist construction, vast industrialization and collectivization were begun.

The NEP was an attempt to rescue the Soviet Union from collapse after its industry had been ravaged and virtually destroyed and the working class exhausted by the long Civil War, imperialist intervention and rebellions (such as the 1921 uprising in Kronstadt). The program was openly admitted to be a retreat that was necessary in order to take forward steps later.

All the contending factions in the Party at that time saw the NEP as a breathing spell. However, there were various approaches on how to take the next step towards reconstructing the USSR on a socialist basis. The only question was how to do it. No one thought of the NEP as a permanent state of development. But that is not the way Shmelyov and his supporters are reviewing that period.

A retreat of sorts it was, of course, but its enduring significance lies elsewhere. . . . It marked the transition to a system that would mobilize rather than suppress, all of the working people's creative energies--the transition from "administrative socialism" to "economic-accountability socialism." Three practical ideas were central to Lenin's plan for putting the economy on a normal, healthy basis. First, commodity-money and market relations were to be developed. . . . Second, economic-accountability trusts, voluntarily organized into associations (syndicates) were to be the economy's basic operating units. Third, cooperative property and cooperative relations were to be developed not merely in the countryside, but in urban areas as well--in industry, construction, retail trade and in what we now call consumer services.¹³

Lenin had no illusions about any of this. He characterized commodity production as the enemy that was necessary for a time until it could be superseded by large-scale socialist planning.

It should be very plain that in Shmelyov's pompous talk about circumventing the "objective laws of economic life," he is talking about the laws governing capitalism. These had to be partially restored under trying circumstances in the USSR, but it was then necessary to proceed toward socialist construction without the kulaks, without the nepmen, without the myriad of new middlemen, the new commercial bourgeoisie which was consuming such a vast part of the social product and at the same time strengthening its political role.

The NEP period finally culminated in crisis. It was necessary to move forward with the collectivization of the peasantry, which ushered in a most difficult period in Soviet history. Few subjects are as confused and lend themselves to as much political tendentiousness in the present era of the Soviet reforms as the collectivization. It cannot be stated too categorically that the collectivization of agriculture in the USSR was a highly progressive development. It was in fact an additional social revolution, a change in the mode of production from private ownership to collective semi-socialist ownership. It at the same time freed millions of peasants for industry and created a strong and formidable proletariat that became the basis for the industrialization of the USSR and the success of the five-year plans that followed. This is incontestable. But the neobourgeois critics such as Shmelyov deliberately confuse this with the forced pace of collectivization and the repression that accompanied it under the administration of Stalin, resulting in wholly unnecessary and unwarranted destruction.

Trying to disqualify socialist property in favor of bourgeois private property, whether it be in agriculture or industry, is a reactionary attempt to bring back the old exploiting order. It is necessary to show clearly and unequivocally what was wrong with the Stalin method of collectivization, but at the same time not to confuse the issue so as to support bourgeois decollectivization of agriculture and dismemberment of socialist industry under the guise of decentralization.¹⁴

It is necessary to distinguish the repression and arbitrary decision-making of the Stalin period from socialist administrative measures in general, which are necessary for the functioning of a socialist economy. Again and again the neobourgeois economists use the terms "administrative measures" and "command economy." While they may apply in some areas, it has become ever so clear with each passing day that they are subterfuges for attacking socialist planning and administration of the economy. This should not be confused with legitimate criticism to overcome bureaucracy, over-centralized ministries and arbitrary management decisions. That's a different aspect of the struggle.

To continue with Shmelyov:

The decision on the new economic mechanism in agriculture is a half-measure. We need to go the rest of the way. . . . Collective and state farms must have the right to sell their output freely to state and cooperative organizations and to consumers. . . . [P]ersonal auxiliary farming must be put fully on a par with collective farming in terms of both economic and social rights.¹⁵

The socialist organization of agriculture and its liaison or coordination with industry can raise Soviet agriculture to the status of an industry like any other. Socialist ownership is what will pave the way toward the communist organization of society. This neobourgeois layer of economists and politicians is not attempting to promote the socialist reconstruction of society insofar as agriculture is concerned, but wants to pull it back to an earlier, outmoded bourgeois form. One would think that the lesson of Poland, where collectivization was long ago abolished for the most part, would be sufficient to show them where this leads. Small farming is the bane of the Polish economy. Food shortages are an ever-present phenomenon.

Soviet agriculture has evolved from private farming to collectives and partially to state farming. The next step should be the organization of agriculture as an integrated industrial element of the entire socialist scientific and technological complex of the USSR. In fact, steps taken in the earlier era of the development of collectives into state farms showed a great deal of promise but were not carried forward on a mass scale. Attempts to discredit these efforts should be resisted. Where the amalgamation of collective farms into state farms was not well calculated or organized, these errors should not be used as a means to attack the principle of the conversion of collective farms into state farms. This is a step backward.

We must finally decide once and for all what is most important to us: to have an abundance of food or to eternally indulge an assortment of irresponsible loudmouths and proponents of equality in poverty. We need to call stupidity, incompetence and active Stalinism by their proper names. We need to do whatever it takes to ensure an ample supply of foodstuffs, for without that the idea of activating the human factor will go nowhere.¹⁶

"At one time," he says, "the elimination of the kulaks as a class was put forward as the motto." He then mourns the elimination of the kulaks and says that what was abolished was the peasant class. It is true that millions of peasants suffered as a result of the forced character of Stalin's collectivization, but it is a wildly gross exaggeration to say that the peasants were abolished. They form what became the industrial and rural proletariat. Would the USSR be today the second greatest world power without them? Crocodile tears for the peasants are in reality a cover for sympathy with the kulaks, who exploited and robbed the peasantry.

Shmelyov treats the peasantry as one undifferentiated mass with the kulaks. He deliberately omits the Leninist approach to the peasantry both before and after the revolution. The Bolsheviks fought for all the peasants. ("Land to the peasants" was their slogan both before and during the revolution.) But in the socialist phase of the revolution, the Bolsheviks differentiated between: first, the kulaks, who by definition employed wage labor (that's what made them rich peasants); second, the middle peasants who did not employ wage labor and worked the land themselves; and third, the poor peasants, the landless peasants and the wage laborers on the land.

The vast majority of the peasants were not kulaks and should not be confused with them, as Shmelyov does, as though the collectivization process with its repression destroyed everybody. These exaggerations only help the bourgeois interpretations of Soviet history.

To sum up, we see that Shmelyov equates a partial return to capitalism with the development of socialism. He lauds the NEP policy, not for what Lenin meant it to be a temporary period of coexistence with capitalist commodity production--but rather as a long-term projection of socialist development. He then further equates the abolition of the kulaks, the exploiters of the peasantry, with the abolition of the peasantry as a class. Moreover, he sees abundance of food as a natural, inevitable product of the capitalist market, forgetting in the meantime that capitalist abundance brings abundance of profits at one pole and misery and poverty at the other pole. This kind of abundance invariably leads to capitalist overproduction and the anarchy of a capitalist crisis.

His prescription for a retreat to small-scale agriculture even disregards the progress being made in the metropolitan imperialist countries. What has the much-vaunted free enterprise system of imperialism done to agriculture in the U.S.? U.S. agriculture is collectivized, but on a capitalist basis. The lion's share of the market is in the hands of huge agribusiness conglomerates that are organized, coordinated and controlled by big business, especially the huge chemical and high-tech industries specializing in pharmaceuticals, biotechnology and the production of fertilizer.

One authority on U.S. agriculture says, "Large and very large farms constitute less than 5 percent of all U.S. farms, yet account for more than half of total gross farm income and for more than four-fifths of net income. Indeed, the very large farms (those with annual gross sales of $500,000 or more), although only a bit more than 1 percent of all farms, account for one-third of gross farm income and more than three-fifths of net income." ¹⁷ This tendency was pointed out by Lenin himself in his writings on agriculture in the U.S. Today farming is one of the best organized high-tech industries, but it is owned privately by the millionaires and billionaires. While there is splendid coordination between industry and agriculture, the virus that kills it all is the private ownership of the means of production and the predominance of the banks and the huge multinationals.

Politically, these attacks from the right in the USSR are directed against Stalinism. Of course, Stalin is now an easy target, so it becomes all the easier to equate Stalinism with Leninism and communism, an argument that leads back to bourgeois norms in the struggle for the restructuring of the Soviet economy and back to bourgeois ideology. It is a broad attack against communism, and Stalin is merely a convenient symbol.

The neobourgeoisie attack perestroika not because they are opposed to it in principle but because, as Shmelyov says, the reforms go only half-way toward capitalism. They are for accelerating the process, but they put it in the framework of a bourgeois economic critique of the Soviet economy. Politically, they pretend to be attacking only the "high-handed," "administrative," "command" strategy of earlier Soviet administrations. In reality, they go far, far beyond that. They go to the very essence of what socialism is and the perspective for the Soviet economy.

References

2. Interview with Mikhail Gorbachev, Washington Post, May 22, 1988.

3. Nikolai Shmelyov, "Advances and Debts," The Current Digest of the Soviet Press (Columbus, Ohio), October 21, 1987, p. 5. Excerpts also appeared in the Wall Street Journal, August 26, 1987, and as "Toward a Soviet Market Economy" in Journal of Economic Growth (Washington), Vol. 2, no. 2, pp. 23-27.

4. All extracts abouve are from Shmelyov, pp. 3-5.

5. First printed in 1899. In V.I. Lenin, Collected Works, Vol. 3, pp. 21-607.

6. Shmelyov, p. 1.

7. V.I. Lenin, Collected Works, Vol. 33, pp. 62-67.

8. Ibid., pp. 62-63.

9. Ibid., p. 64.

10. Ibid., pp. 65-66.

11. Ibid., p. 66.

12. Ibid., p. 67.

13. Shmelyov, p. 2.

14. Those who have forthrightly stood up for maintaining a centralized economy have been ousted. Nikolai Baibakov, the head of GOSPLAN, the Soviet planning agency, was removed in 1985; N. Patolichev, the former head of the foreign trade department, was also removed in 1985 and the government's monopoly on foreign trade was breached, as we've pointed out in earlier articles; and N. Gluskov, a former head of GOSKOMPSEN and an opponent of the reform, was removed in 1986. See Ed Hewett, Reform of the Soviet Economy (Washington, DC: Brookings Institution, 1988), p. 283f.

15. Shmelyov, p. 4.

16. Ibid.

17. Robert K. Landers, "Should Family Farms Be Saved?," Congressional Quarterly's Editorial Research Reports (Washington: 1988), Vol. 1, no. 17, p. 237, fn.

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